2010 (6) TMI 100 - HC - Central Excise

Appeal to Tribunal- maintainability- The show cause notice and Order in original for the amount of wrong credit taken on the inputs used exclusively in the generation of electricity, for which no duty is levied, has been confirmed. Being aggrieved by the same, the assessee preferred an appeal. The Commissioner of Central Excise and Service Tax (Appeals) has set aside the order and allowing the appeal filed by the assessee. Challenging the same, the appellant herein preferred a further appeal before the Tribunal. The said appeal was taken on file by the Tribunal and an order of stay was granted initially. However, when the matter was taken up for final disposal, the Tribunal has passed an order to the effect that the amount involved being very small, the issue raised by the appellant need not be considered and the same shall be considered in an appropriate case. Challenging the said order of the Tribunal, the appellant has preferred the present appeal. Held that- in the light of the decision of Standard Radiators Pvt. Ltd. v. Commissioner of Central Excise that the Tribunal has totally failed in deciding the appeal on merits.

Summary

Issues:
1. Tribunal's power to dispose of an appeal without passing a reasoned order on merits.
2. Recoverability of duty credit on inputs not utilized in the manufacturing process.

Issue 1 - Tribunal's Power to Dispose of an Appeal:
The appellant raised the issue of whether the Tribunal can dispose of an appeal without passing a reasoned order on merits, especially in cases where the difference in duty involved exceeds a certain threshold. The Tribunal had initially granted a stay but later dismissed the appeal without considering the merits due to the small amount involved. The High Court emphasized that the Tribunal, being a creation of statute, must act in accordance with the law. Referring to the second proviso to sub-section 1 of Section 35B, the Court highlighted that the Tribunal has discretion to admit or refuse an appeal based on the duty amount or penalty involved. If the amount exceeds the specified limit, the Tribunal must decide the appeal on merits. In this case, the Tribunal erred in dismissing the appeal without jurisdiction, as the appeal involved an amount exceeding the threshold, and the Tribunal was duty-bound to decide on the merits.

Issue 2 - Recoverability of Duty Credit:
The dispute revolved around the recoverability of duty credit on inputs used in generating electricity but not utilized in the manufacturing process. The initial order confirmed a demand for wrong credit taken on such inputs, imposing a penalty on the assessee. The Commissioner of Central Excise and Service Tax (Appeals) set aside the order, allowing the appeal. Subsequently, the appellant appealed to the Tribunal, which initially granted a stay but later dismissed the appeal without delving into the merits due to the small amount involved. The High Court, citing relevant Supreme Court judgments, emphasized the Tribunal's duty as the final fact-finding authority to decide on appeals based on detailed examination of evidence. The Court set aside the Tribunal's order and directed a fresh consideration of the appeal on merits within three months. The questions of law were answered in favor of the appellant, allowing the appeal without costs.

In conclusion, the High Court ruled in favor of the appellant, directing the Tribunal to decide the appeal on merits within a specified timeframe, emphasizing the Tribunal's duty to thoroughly examine evidence and decide appeals based on detailed findings.